HK$888 'as low as we go' for HK-Osaka

Budget carrier Peach Aviation has said its cheapest one-way fare of HK$888 between Hong Kong and Osaka is the best it can offer for now as both cities are expensive to operate in for low-cost players.

'You will find that all the chairs in our offices are of different colours and shapes,' said Shinichi Inoue, chief executive of the Kansai-based budget carrier, on the sidelines of a press conference announcing the new Hong Kong-Osaka flight in the city yesterday.

'We bought all the furniture through auctions on the internet,' as one of the company's many cost-control measures, Inoue said.

The low-cost carrier, formed by All Nippon Airways and Hong Kong-based direct investment fund First Eastern Investment, will launch the route on July 2, its first medium-distance flight.

The four-hour journey will cost HK$888 to HK$3,388 one-way, fuel surcharge and taxes included. Hong Kong passengers can use Kansai as a transit stop to Sapporo, Fukuoka, Nagasaki or Kagosima, which are on Peach's existing network.

Despite its budget tag, Peach is not offering rock-bottom prices on the Hong Kong-Kansai route.

Its round-trip fare starts from HK$1,776, whereas ANA offers a HK$2,810 package that includes airfare and two-night hotel accommodation. However, Peach's price includes a HK$600 fuel surcharge, but the ANA package does not.

'Package fares are subject to a certain period, while our airfares are available every day,' Inoue said.

The daily flight, to operate with a 180-seater, is expected to divert passengers from ANA and other carriers to Peach. Inoue insisted the new flight would create new demand, especially from Japanese travellers, but admitted there was little room for further fare cuts.

On whether Hong Kong was a destination friendly to low-cost carriers, he said: 'We fly from Japan. It doesn't cause many problems for us, compared with airlines that are based here.'

Another budget flyer, Jetstar Hong Kong, a joint venture between China Eastern Airlines and the Qantas Group, has applied for a licence and expects to launch short-haul services in the first half of next year.

Kansai airport has lowered its landing and parking fees, which account for 16 per cent of total operating costs for airlines. By autumn, it will have a dedicated budget terminal ready for carriers such as Peach Air.

Peach will launch flights to Okinawa next month, followed by services to Taipei by the end of September.

'We will definitely fly to mainland China and broaden our network in the Greater China market,' said Victor Chu, chairman and chief executive of First Eastern.

Peach now operates three Airbus 320s on four domestic routes and one international route to Seoul. Its fleet will expand to 10 aircraft by the second quarter of next year.